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New Blockchain-Based Smart City Project Planned for Cambodian Capital

A Singaporean startup, Limestone Network, is using blockchain to sustain a smart neighbourhood at the heart of the Cambodian capital.

A Singaporean startup, Limestone Network, is using blockchain to sustain a smart neighbourhood at the heart of the Cambodian capital.

As Tech in Asia reports on August 14, the 100-hectare mixed-use development in Phnom Penh encompasses residential properties, offices, retail centers, schools and a large-scale exhibition hall: it counts 10,000 business tenants and a daily population of 190,000.

Limestone emerged from the first round of startups in the Singaporean government’s blockchain Tribe Accelerator, backed by government agency Enterprise Singapore. 

Digital passports and wallets

At the heart of the Phnom Phen project is a blockchain-powered ID system, which creates a digital passport for residents and commuters via the Limestone mobile app. 

Users must notably undergo background checks before a passport is issued, which grants them access to a mobile digital wallet and includes features such as providing tap-in tap-out access to different buildings.

In order to disintermediate the ties between enterprises and the public, the project focuses on using blockchain to provide secure data portability — so that a firm can skip middlemen in providing various services directly to consumers. 

It also aims to widen financial inclusion, using digital payment history and lifestyle data as an equivalent to a credit score that enable residents and workers to apply for microloans and other financial services. 

Slated for completion by early 2022, the project will in future on-board various partners such as ride-hailing apps, financial institutions, retail brand owners and data analytics firms.

Over the course of the next five years, the startup intends to roll out similar smart city projects across South East Asia with the cooperation of local governments. 

Blockchain-powered smart cities

Visiting senior research fellow at the National University of Singapore Business School Emir Hrnjic told Tech in Asia that the principle advantage of blockchain-based smart cities is its potential to aggregate, analyze and distribute real-time data. 

He acknowledged the regulatory and data privacy challenges that both centralized and decentralized technologies are faced with, remarking that:

“The future of blockchain-enabled smart cities would likely be something in between an ideal society, where everyone has control over their lives and environment, and a dystopian society of a few controlling the masses.”

Earlier this month, Cointelegraph reported that South Korea’s capital, Seoul, plans to launch its own digital currency as part of its bid to transform into a blockchain-based smart city.

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Cambodian Regulators Say Dealing in Crypto Without License Is Illegal

Dealing in cryptocurrencies without obtaining a license from relevant authorities has been declared illegal in Cambodia, according to an official statement published Tuesday, June 19.

The joint statement was first penned on May 11 by the National Bank of Cambodia (NBC), the Securities and Exchange Commission of Cambodia (SECC) and the General-Commissariat of National Police, and has now been publicly released on the NBC website:

“Competent authorities clarify that the propagation, circulation, buying, selling, trading and settlement of Crypto Currencies [sic] without obtaining license from competent authorities are illegal activities.”

The statement refers to specific cryptocurrencies such as “KH Coin, Suncoin, K Coin, One-coin, Forex coin,” declaring that they pose a potential risk to the public and “society as a whole.” OneCoin, as Cointelegraph reported earlier this year, has faced long-standing and widespread allegations of being a Ponzi-scheme.

The authorities specify these risks as including the fact that cryptocurrencies’ issuance is “not backed by collateral,” vulnerability to cybercrime, price volatility, and a lack of investor protection mechanisms that results from the pseudonymous nature of crypto transactions.

The authorities further raise concern over the potential facilitation of money laundering and terrorism financing, which they likewise attribute to pseudonymity.

The statement appeals to the public to be “cautious” of dealing with cryptocurrencies without duly obtaining a license, stating that unlicensed activities will be subject to penalties “in accordance with applicable laws.”

As local newspaper The Phnom Penh Post reported earlier this year, the NBC issued a directive in December 2017 banning all domestic “banks and microfinance institutions” from trading or advertising cryptocurrencies. The Post report highlighted that regulatory clarity had not yet been forthcoming from the country’s authorities at the time of writing, with cryptocurrencies remaining in a “gray area” between the SECC and NBC’s jurisdictions.

As early as 2014, the NBC said it would not recognize Bitcoin (BTC) as a currency, given that it is not issued by “a central bank of any jurisdiction.”

This March, a press release from the Association of Southeast Asian Nations (ASEAN) Blockchain Summit suggested that Cambodia may however prove more amenable to the idea of a nationally issued digital currency.

The press release suggested that the Cambodian government was investigating a crypto project dubbed Entapay, which it compared directly with Venezuela’s centrally-issued Petro.

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Crypto Trading Without License Is 'Illegal,' Cambodian Regulators Say

Authorities in Cambodia have announced that domestic investors are now required to obtain a license in order to purchase, sell or trade cryptocurrencies – activities that would be otherwise regarded as illegal.

In a joint statement signed on May 11 and published on Tuesday, the National Bank of Cambodia (NBC), the Securities and Exchange Commission of Cambodia and the General-Commissariat of National Police said that the decision was made after observing a growth in cryptocurrency trading in the country.

Suggesting that such activities “will cause potential risks to the publics [sic] and society as a whole,” the statement declares:

“Competent authorities clarify that the propagation, circulation, buying, selling, trading and settlement of cryptocurrencies without obtaining license from competent authorities are illegal activities.”

The statement further says that failure to obtain a license for the above activities “shall be penalized in accordance with applicable laws.”

The three agencies go on to explain that involvement with cryptocurrencies can bring investor risk arising from price volatility, cybercrime, and a lack of consumer protections, further listing several crypto projects – including the alleged Ponzi scheme OneCoin – as examples.

So far it isn’t clear just what license needs to be applied for, or what would be required for a successful application, but the requirement is likely to present a notable barrier for investors.

The joint statement marks a notable widening of a ban issued by the NBC in December 2017 that prohibited domestic financial institutions from offering account services to cryptocurrency investors and traders, according to an earlier report from Phnom Penh Post.

Since then, cryptocurrency related projects such as initial coin offerings (ICOs) and crypto trading activities continued to operate in a gray area, as regulators had yet to publish an explicit legal framework providing clarity for users of the nascent technology.

NBC image via Shutterstock

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Bank For International Settlements Distances Itself From Centralized Digital Currencies

A new joint European banking report has poured cold water on the effectiveness of so-called central bank digital currencies (CBDCs).

The report, submitted by two working groups under the auspices of the Bank for International Settlements (BIS) and European Central Bank (ECB), warns about the “adverse” effect of introducing a CBDC.

It also advocates that banks and other authorities “continue their broad monitoring” of digital currencies outside centralized control such as Bitcoin.

“Any steps towards the possible launch of a CBDC should be subject to careful and thorough consideration. Further research on the possible effects on interest rates, the structure of intermediation, financial stability and financial supervision is warranted,” its authors conclude.

“The effects on movements in exchange rates and other asset prices remain largely unknown and also deserve further exploration.”

In separate comments on the report’s findings, ECB and BIS executives Benoît Cœuré and Jacqueline Loh said that decentralized digital currency, specifically Bitcoin, was “not the answer to the cashless economy.”

The hands-off approach to CBDCs further broadens the divide between the EU and other countries’ central banks on the concept.

Russia, Venezuela, the Marshall Islands, Cambodia, Turkey and Iran are conversely issuing or at least sympathetic to the concept of state-issued cryptocurrency.

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Inspired By Venezuelan Petro, Cambodia May Issue A National Cryptocurrency

Following last month’s launch of the Venezuelan government-backed Petro coin, Cambodia is considering launching its own crypto project named Entapay, a press release for the Association of Southeast Asian Nations (ASEAN) Blockchain Summit reported March 2.

The Blockchain Summit, which will be held in Phnom Penh on March 7, describes Entapay as a project based on the “quantum entanglement” of security and encryption, writing that it will use Blockchain technologies to create a fast and secure user experience.

According to the press release, Entapay is “expected to become the connection between integration payment of encrypted currency and the real world”:

“It has the great potential to even replace VISA as the new mainstream payment mode.”

The press release compares the Entapay project directly with Venezuela’s Petro, which they classify as a digital currency that “assist[s] the country in avoiding the Western world’s economic sanctions – while providing a new channel of economic development for a country suffering from severe inflation.” A similar currency in Cambodia, the press release notes, could help the country take advantage of the Blockchain revolution.

The ASEAN Blockchain Summit, themed “Tomorrowland Built on the Blockchain”, will help to promote Blockchain-based financial technology in Southeast Asia and abroad, in part by building the first institute for Blockchain technologies in ASEAN, according to the press release.

This Blockchain Summit is not the first time that Cambodia has ventured into Blockchain. Last summer, the National Bank of Cambodia partnered with a Japanese Blockchain identity company to test distributed ledger technology for payment services.

At the end of February 2018, the Marshall Islands also announced that they would release their own cryptocurrency with an Initial Coin Offering (ICO) and free trading.

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One ICO to Free Everyone From International Data Roaming

International travel is complicated and littered with obstacles such as passports, visas, tickets and the like. An additional headache these days is keeping connected in foreign countries. Anyone who travels frequently will recount tales of terror involving huge mobile phone bills when returning home from an overseas trip.

If you are locked into a contract by the provider in your home country, you will have to roam when you travel and there is no escape. If you are not locked into a contract and you can use a local SIM card or a roaming SIM card, you will get disconnected from your friends, family and important messages. TripAlly is promising to put an end to these issues forever and liberate travelers from the purveyors of international roaming.

Crowdfunding to provide seamless global internet

TripAlly wants to use the initial coin offering (ICO) route to gather funds for building their platform. This platform would not only allow travelers to use internet across borders but also avail of other services like taxi, currency exchange and information services. TripAlly will be launching Ally Token, which is an ERC20 token issued on the Ethereum blockchain to raise funds.

A total of 100 mln Ally tokens would be distributed initially. Any left over tokens from the pre-ICO and ICO  will be burned. The initial price that has been fixed is 0.005 ETH per Ally token, or 200 Ally tokens per 1 ETH. While the pre-ICO is still running until October 15th, the ICO will begin on October 15, 2017 and last until November 30, 2017. There are discounts available for early buyers during the ICO period.

Details on fund allocation, discounts and future plans are available in a detailed whitepaper that TripAlly has released. Ally’s services will be first launched in South-East Asian countries such as Thailand, Cambodia, Vietnam, Myanmar, Laos and Malaysia.

ICO Days

Buyers may make predictable gains

Investors stand to benefit from the TripAlly ICO in multiple ways. In order to gain a better understanding of the advantages of this crowdfunding effort we talked with Aleksey Gordienko, the CEO and Co-Founder of TripAlly, who explains that there be a fixed return on the ICO as the minimum price of the Ally Token will be $3 after the ICO. Additionally, he pointed out that the token will be liquid and can be traded on the exchanges. Gordienko says:

“The main benefit for investors purchasing ALLY token is imminent financial gain after the ICO and, once the TripAlly Internet service becomes available in Asia the price of one ALLY token will be no less than $3. One ALLY token is equivalent to one day of mobile internet on TripAlly’s platform. For those who don’t have ALLY coins, prices will be set at $3 per day of mobile internet. At the pre-ICO stage we sell ALLY tokens with deep discounts, resulting in a price per token between $0.50 and $0.60 cents. This structure guarantees an exceptional ROI for the purchasers of ALLY tokens.”

TripAlly claims that the return on investment (ROI) may be as high as 400%. Talking about the transferability and liquidity of the coin Gordienko adds:

“The second  important point is that every purchaser of ALLY tokens becomes our promoter (in terms of marketing) and distributor; we don’t prohibit the transfer/resell of ALLY tokens within TripAlly platform, besides cryptocurrency exchanges.”

Investors who want to purchase tokens can head to the website and get information on the purchase procedure.

Why TripAlly really matters

TripAlly is not just about cheap internet for people who go abroad. In fact, it is a comprehensive platform with tie ups in the South-East Asian region in place already. They will provide Internet through a mobile application on your existing home network SIM card using mobile telephone partnerships with networks in destination countries. They will also help you convert currency as they act as an exchange.

Transportation will be provided through partnerships with Uber and other providers. Tickets to attractions will be available for users as well. It is basically the only travel application a user will possibly need. Travelers get to choose whether they want to purchase Internet and other services before they leave or they can gain access when they arrive at major airports and border crossings.

Aleksey commented on how the services will be made available:

“Services will be available at major airports of departure and in every airport of arrival where TripAlly services are present, and, eventually in every major airport. There is no restriction from TripAlly when and where our clients can use services. Travelers can purchase TripAlly services before the departure date, at the point of arrival or during their stay in the country. The activation of TripAlly Internet services happens instantly after the payment process is completed.”

A comprehensive presentation explains the nitty gritty of how it all comes together.

Everybody hates roaming

If there is one aspect of mobile telephony that everyone can agree to hate, it’s be international roaming. It is expensive, unpredictable and makes even the hardiest traveler cringe in pain. Providing seamless internet coverage with just one application would be a godsend. We asked Aleksey what he thought would be the biggest challenge that TripAlly would like to tackle and here is what he had to say:

“Roaming has such a negative word to people that we have banned it from our vocabulary in the company. The existing solution for travelers to obtain mobile internet could be categorized into four major categories:

  • Roaming, which everyone hates;
  • Local or global SIM-cards, which are inconvenient because there are many services attached to your original SIM-card;
  • Local Wi-Fi, which suffers from security problems and geolocation restrictions, and which you can’t take with you to the beach or the park;
  • Pocket Wi-Fi/Hotspot, which requires the user to purchase an expensive internet package and carry an extra device all the time. It’s also difficult to share connectivity with others.

There were 1.2 billion travelers around the world in 2016 and that number is constantly increasing. At TripAlly we believe that everyone who travels should have access to cheap and unlimited mobile Internet. Travelers should not have to worry about staying connected with their loved ones whilst they travel, and they should be able to share their travel experience instantly. It will make the travel industry better and contribute to the freedom of travelling!”

If TripAlly can sort out the pains of travel, its investors will surely have a lot to gain. It will be interesting to see how they go about doing it.

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

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Get Me My Wedding Present: How We Run a Micro-Lending Business in Cambodia

MicroMoney co-founder and CEO Anton Dzyatkovsky on attracting new customers, recruitment issues and risks in greenfield countries.

Business is increasingly globalized and decentralized, and we live in challenging times.

A couple of years ago I thought I needed a new challenge in my life, and some time later we packed and moved to Southeast Asia to turn a new page and become pioneers in the payday loan industry. We saw it as an opportunity to enable global inclusion for unbanked people, so in our venture my wife and I chose Cambodia for our home base.

Now that we’ve opened new offices in Myanmar, Thailand and Sri-Lanka, our decision to start with Cambodia can be seen as a definitive step which enabled us to embrace the largest community of unbanked people in the region, bringing the advantages of Blockchain as the key technology for global financial inclusion.

Cambodia is all about banks

For us as Europeans, the first surprise was the population’s absolute trust in local banks.

“There are 36 banks per 1.5 mln urban residents in Pnom-Penh, Cambodia. No bank has ever failed or had its license withdrawn. Fraud is literally unheard of.”

The US dollar is as used in Cambodia as the local currency is, and the exchange rate has remained stable for over 20 years. State regulators do not exercise particular pressure on the financial industry, and by the time we stepped into the game, 50 organizations had been involved in the consumer loan industry, each with an average capital of $1.5 mln and an ARPU of $5,000.

With such a lax attitude to banking and loaning, the local banks and microfinance organizations wouldn’t lend a cent without collateral and papers.

Usually, people give real estate or land property security and have to bring at least five certificates, passports and a person ready to vouch for the borrower.

It works: 30-day overdue loans in Cambodia account for only 0.9 percent of the total, so the PAR ratio (portfolio at risk) is quite profitable (according to the local Central Bank).

We decided to pursue a goal of eliminating obstacles on the way to global inclusion, and put trust in Blockchain: the technology offered an opportunity to get rid of numerous papers and jump over banks’ legacy approach to fully digitized and secured customer data.

Our Cambodian lessons

Having developed a real business in Cambodia, we developed a simple checklist to score a country and find out whether it might work to run operations there. Some might find it useful, especially when looking towards promising Southeast Asian countries:

  • A growing share of the middle class due to the growth of GDP. For instance, Cambodian GDP grew six percent in 2016.
  • A market capable of generating cheap leads. We discovered all Cambodians belonging to the target audience have at least one active Facebook account, and for them Facebook often equals Internet in general: every national mobile operator provides free access to Facebook.
  • Dormant or non-existent competition. in Cambodia there were no paperless lending services without an escrow of land or real estate property.
  • Eager audience in need of a product. when we were checking out the market, we found only five percent of the population had a credit record. According to McKinsey, the number of ‘unbanked’ people in Asian region overall ranges from 65 to 80 percent of the adult population.
  • Collaboration at the local level. It helped us understand local customers and comply with local regulations (in this case you must be ready to assign 51 percent of your newly established company to a local partner).

Be open: local partners are essential to your success

“In the turbulent waters of Asian business realities, we understood that a well-established local partner is what can fuel your business ambition.”

When launching our operations, we considered about thirty local organizations and eventually found excellent partners. Tetsuji Nagata, one of our co-owners, brought along a Japanese venture fund, East Wing ASA Capital, with capital of about $100 mln, and became our co-founder with a share of 50 percent.

A local businessman with a Khmer background (Oknha Sorn Sokna), counselor for economic affairs of the Prime Minister of Cambodia, Hun Sen, and CEO of Sonatra, one of the largest development companies in the country, provided us with an office space and full legal support in Cambodia.

Look at who you hire – they are a reflection of your average customer

We have learned the hard way how it is to find local employees, which led us to a number of cultural discoveries. This was a way to learn our potential customers and get a deep-dive into their peculiarities and psychology.

  • They are not kings of planning and forward-thinking. This explains loan services’ popularity over long-term deposits or projects: the key goal for a person is to get some money for immediate purpose – right here, right now.
  • Patriarchal society and strong nepotism contribute to employees’ motivation. When hiring, we had to persuade our employees that our company is their family and the manager is a patriarch, in order to motivate them.
  • Teamwork matters. The Cambodians, as many people in South-East Asia, tend to be very social and they work more effectively in teams rather than individually, which presents a striking contrast to European or American individualism.
  • Money is not the key driver and motivator. Earning is not the main reason why Cambodians go to work. An employee can quit anytime they feel they are treated badly, and nothing can hold them – they are likely to leave the very second they feel their work is not appreciated or valued. This helped us to understand why a lot of our borrowers change their jobs quite a lot and adapt the scoring system accordingly.
  • Single-tasking beats multi-tasking. Cambodian employees are not great multitaskers. They are not capable of working efficiently when burdened by several KPIs simultaneously.
  • As a foreign company, you have to earn the locals’ trust. Foreign companies are not trusted a lot, so to improve corporate image as a good employer, you need to put forward some advantages of having a working relationship with you.

“Having understood the correlation between local employees and local customers, we decided to evaluate solvency/trustworthiness just the way we designed: we scored candidates the way we scored borrowers. Having interviewed over 400 applicants, we found the 20 best-performers.”

You are a helper rather than a conqueror

There was a reason why we decided to choose Cambodia and Southeast Asia to build our new business.

We took on a great mission to help two bln unbanked people become part of a global financial ecosystem. Due to the rigid conditions under which Cambodian banks are ready to lend, the majority of people prefer to stay aside.

When we designed a solution to eliminate this obstacle, we had seen tens of thousand of customers try our app. About 90 percent of our borrowers take their very first loan ever, and 75 percent of customers have an average income of $200 per month.

For 15 percent of borrowers, payday loans became a means of covering their daily needs (this applies not only to end users, but to small businesses as well – think street food providers who buy groceries in the morning and earn the money necessary to return the loan by end of day).

“For 35 percent of borrowers, a loan was needed to cover the costs of a wedding present, which is of great significance in the country.”

Our scoring system evaluates the number of parameters it gets from the user questionnaire, approving one per each six applications. We reject an application in 23 percebt of cases, due to the absence of regular work, in 20 percent of cases due to refusal to provide contacts, and in seven percent of cases due to false information.

The conversion from the first to the second and further loans is quite high, and amounts up to 73 percent. Thirty-four per cent of clients take five or more loans, and seven percent of users take ten and more. The sweet spot of our audience is four percent of clients who borrowed money fifteen or more times.

Take on Facebook for an efficient promo

Our website and Facebook account are our major promo tools in Cambodia.

Having placed a loan calculator and lending conditions on the website, we have seen a sincere reaction from the clients via Facebook – which is the key web resource that people visit daily, thanks to mobile service providers.

Our fan base grew up to 500,000 legitimate fans, all of them ready to relate their experience with us – nothing we have ever seen anywhere else. Cambodians are a very sincere people.

The market is ready to technology advancements

Technology proved to be our greatest asset and an indisputable advantage for our customers.

We based our scoring system on a neural network, and when our application provides access to their social media profile data, customers feed an infinite pool of unstructured data to the neural network engine and help it learn more correlations, and assess the credit score more accurately.

“Cambodians are unwilling to provide a pile of papers to the bank in order to get a loan worth $30, and they favoured an opportunity to tick a couple of boxes and get their money in a matter of minutes.”

Some of them are ready to provide more data to the neural network, which essentially makes them available for offers from other banks, telecom providers and retailers. When it happens, we consider our mission accomplished, since we were able to provide a person with an initial credit record and make them entitled to further interactions with the market.

We are on the way towards developing the first Blockchain-based credit bureau, which will enable us to store credit records in a secure, decentralized and accessible manner.

Cambodia: aftermath

Cambodia was a start of a long road. Having established operations in Cambodia, we moved on to use the same working model to launch operations in Myanmar, Sri-Lanka, Indonesia and Thailand, thus growing our business and learning more and more from the lessons of Cambodia.

Southeast Asia is an exciting market: people are up for new challenges for a better quality of life, and this presents a promising audience for many good ventures, due to the fast return of investments.

It’s also a real challenge to work in a country which is so excitingly different, and our Cambodian lessons helped us to take on new goals and opportunities in the region.  

Anton Dzyatkovsky is a serial entrepreneur, diplomatic negotiator, and creative expert in marketing. He is a passionate and hardworking business leader with more than 13 years of experience in different positions within FinTech, Retail and E-Commerce industries. Since 2016, Anton uncorked opportunities to participate in international business development, focusing on Asia. Anton sees his key challenge in opening new markets from scratch. Currently, Anton is CEO and co-owner of MicroMoney, a lending services provider based in Southeast Asia.